Early Contract Extension May Happen with Dockworkers at East & Gulf Coast Ports

Port of Virginia

Something has changed at U.S. ports. And it’s a good thing for shippers.

The International Longshore & Warehouse Union (ILWU) agreed to an early contract extension in August that brings port stability to the West Coast ports through July of 2022, and now the International Longshoremen’s Association (ILA) may do the same thing at the East and Gulf Coast ports.

What’s amazing, is this would never happen traditionally.

There’s an unofficial (but possibly official) policy of the dockworkers unions not to extend contracts or agree to new ones before the previous contract has expired.

This practice preserves the unions’ most powerful negotiating weapons against employers at the ports: strikes, threat of strikes, and labor slowdowns.

Of course, the problem with strikes and slowdowns at the ports is that they cause importers, exporters, and the economy as a whole to suffer.

Luckily, we haven’t actually seen a full scale strike at the East and Gulf Coast ports in decades. However, we were in a full scale strike watch back at the end of 2012 leading into 2013 when one was scheduled and the contract negotiations between the ILA and United States Maritime Alliance (USMX) needed mediation to get completed.

Things have been worse recently on the West Coast. During the contentious 2014-15 contract negotiations, labor slowdowns and mini lockouts left export produce rotting on the docks and kept import goods from hitting shelves during the holiday shopping season. This caused many shippers to divert goods from the West Coast to East and Gulf Coast ports.

Some of that market share reverted back to the West Coast; however, East and Gulf Coast ports have retained some market gains. But with the ILWU agreeing to an early contract extension and the current ILA contract expiration coming up next year, the East and Gulf Coast ports are in danger of losing their gains.

That’s probably why we’re seeing a story from the Journal of Commerce (JOC) posted yesterday (November 8th) headlining ILA, USMX to discuss multiyear contract extension. Senior Editor Joseph Bonney writes:

The International Longshoremen’s Association (ILA) and its East and Gulf coast employers plan to meet in early December to discuss a contract extension that could stretch beyond the five-year deal that West Coast dockworkers recently approved.

…

ILA president Harold Daggett has summoned the union’s wage scale committee, which comprises more than 150 local delegates, to meet with USMX representatives Dec. 5 and 6 in Hollywood, Florida, to discuss contract issues.

Union and management officials have been tight-lipped but reportedly are discussing a contract extension that would run as long as six years, to September 2024.

In 2015, while financial losses shippers suffered during the contentious ILWU contract negotiations were still fresh, the ILA and USMX actually announced plans to open early discussions on a long-term contract.

I wanted to believe such early contract negotiations would happen, but I was skeptical that it might just be a move to gain more market share from shippers feeling betrayed by the congestion on West Coast ports after the ILWU and Pacific Maritime Association (PMA) pledged to keep cargo moving during contract negotiations.

It seemed I was right to be skeptical. A couple years passed without any forward movement on negotiations.

Then a surprise ILA labor slowdown hit the Port of Charleston in response to an automated gate system and it looked like we would see a contentious and costly fight over automation during contract negotiations next year when the current contract expires instead of a smooth or early transition to a new or extended contract.

That makes this news of movement toward an extension before the current contract expires even more exciting.

Perhaps instead of an isolated event of an early extension between the ILWU and PMA, such forward thinking could become the new norm. That would be much better than the traditional trend of costly and contentious negotiations every time a dockworkers union contract expires at the ports.

Of course, nothing happens until it happens, don’t count your chickens until they’ve hatched, and other such cliché but wise sayings apply here. Automation and other dockworker contract concerns still exist and many will not want to give up the leverage the unions gain by allowing contracts to expire.

Shippers should be encouraged by this step toward an early contract extension but temper hopes until an extended or new contract actually does happen at the East and Gulf Ports.